Federal Tax Update - June 10, 2013

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Lynn Nichols of Nichols Patrick CPE delivers the weekly federal tax podcast.  For all of your CPE needs, please go to www.ficpa.org.  The podcast covers the following topics this week:

  1. Purported Management Fee Payments Weren't Deductible
    (Wiley M. Elick et ux. et al. v. Commissioner; T.C. Memo. 2013-139; 6/3/2013)
    The Tax Court, sustaining penalties, held that a dentist's payments for purported management fees for two tax years were not deductible under section 162 and that business losses the dentist and his wife claimed for three tax years were subject to the passive loss limitation under section 469.     [Doc 2013-13504]

  2. Independent Contractor Can't Deduct Travel Expenses
    (Glenn Patrick Bogue v. Commissioner; No. 12-1508; 6/3/2013)
    The Third Circuit affirmed a Tax Court decision that found an independent contractor's travel expenses between his home and work sites to be nondeductible commuting expenses, rejecting the contractor's argument that his bank and various building supply stores were regular work locations for him.     [Doc 2013-13536]

  3. Real Estate Activity Was Passive; Rental Property Losses Disallowed
    (Peter H. Hofinga; T.C. Summ. Op. 2013-43; 6/3/2013)
    The Tax Court, in a summary opinion, sustained the IRS's disallowance of a couple's rental property losses, finding that the husband's real estate activity was a passive activity because he did not show that he performed 750 or more hours of services in real property trades or businesses during either of the tax years at issue.     [Doc 2013-13509]

  4. No Carryover Deductions From Conservation Easement Contribution
    (Michael S. Mountanos; T.C. Memo. 2013-138; 6/3/2013)
    The Tax Court, sustaining a gross valuation misstatement penalty, held that an individual isn't entitled to carryover deductions from a charitable contribution of a conservation easement on undeveloped and rugged land because the individual didn't show that the conservation easement had any value.      [Doc 2013-13502] .

  5. Bankruptcy Court Denies Confirmation of Debtor's Plan for Not Including Future Tax Refunds
    (In re: Sandra Sanchez Ramos; US Bnk Ct Puerto Rico; No. 12-08816; 6/4/2013)
    A U.S. bankruptcy court declined to confirm a debtor's chapter 13 plan, finding that she failed the disposable income test by not accounting for future tax refunds that would increase the base amounts of the plan.     [Doc 2013-13716] 
  6. Payment to Former Spouse Not Alimony; No Penalty Imposed
    (James J. Faylor; T.C. Memo. 2013-143; 6/5/2013)
    The Tax Court held that an individual wasn't entitled to deduct as alimony $20,000 that he transferred while negotiating a temporary support order because his former spouse didn't receive the money under a divorce or separation agreement but that the individual isn't liable for an accuracy-related penalty.      [Doc 2013-13769] 

  7. Finance Committee Releases Tax Reform Paper on Income and Business Entities
    (TYPES OF INCOME AND BUSINESS ENTITIES, 6/6/2013)
    Partial or full integration of corporate and individual income taxes are among the proposals outlined in the Senate Finance Committee's eighth paper on tax reform options, which focuses on types of income and business entities. [Doc 2013-14001]
    Full-Text PDF

  8. Salesman Denied Deductions for Employee Business Expenses
    (Christopher Robin Nielsen; T.C. Memo. 2013-144; 6/6/2013)
    The Tax Court held that a salesman isn't entitled to deductions for employee business expenses that he failed to show were ordinary and necessary.     [Doc 2013-13893]

  9. Wells Fargo Not Required to Turn Over Some Tax Accrual Workpapers to IRS
    (United States v. Wells Fargo & Co.; USDC MN; No. 0:10-mc-00057; 6/4/2013)
    A U.S. district court held that although the IRS had a legitimate purpose in issuing summonses related to Wells Fargo & Co.'s financial reporting and uncertain tax positions, some of the company's tax accrual workpapers were protected from disclosure to the IRS by work product and attorney-client privilege.     [Doc 2013-13840] 
LAST UPDATED 6/10/2013